UVIMCO invests the endowment and other long-term funds held by the University and its related foundations in the Long Term Pool, which is custom-managed for the endowment spending requirements and risk tolerance of the University.
The Long Term Pool’s value totaled $9.5 billion as of June 30, 2018. The shareholder composition of the Long Term Pool as of June 30 is as show in the chart below.
UVIMCO also manages the Short Term Pool for the University and its related foundations with near-term liquidity needs. The shareholder composition of the Short Term Pool as of June 30, 2018 is as show in the chart below.
The University of Virginia’s strong endowment has been a critical asset in enabling the University to expand its program offerings and facilities and attract high-quality students and faculty.
The University’s endowment-per-student ratio is one of the largest among U.S. public institutions of higher education. In the United States, the University of Virginia’s consolidated endowment
UVIMCO believes that attractive long-term investment returns are best produced by employing a consistent investment philosophy and process over time. Therefore, we adhere to the following core tenets as we invest the Long Term Pool.
We focus on the long term.
UVIMCO’s investment horizon is measured in years, if not decades, which aligns with the mission of the University as well as the perpetual nature of an endowment. A long-term perspective provides us with a critical competitive advantage, as global markets are increasingly becoming more short term oriented. Our focus on the long term is also especially well-suited for investments in less efficient illiquid or niche markets that provide fertile ground for active management. We leverage patience to generate attractive long-term risk-adjusted returns, but we acknowledge that this strategy may sometimes result in short-term underperformance relative to passive benchmarks and peer investors.
We believe in active management.
Consistently outperforming passive indices is difficult, but it can be done. UVIMCO has a long history of partnering with exceptional investment managers who have demonstrated the ability to generate alpha through disciplined investment processes, novel insights and hard work. Sourcing, evaluating and developing these relationships is our core competency and the primary driver of UVIMCO’s excess returns over time. The reputation we have cultivated as a value-added partner, our extensive network of market contacts and the patient capital we provide have enabled us to build relationships with many of the most successful investment managers in the world.
We employ a global, flexible investment mandate.
Our investment process is structured and disciplined, but we also seek to be flexible and innovative in response to constantly evolving global financial markets. The Long Term Pool is a broadly diversified portfolio with capital allocated to well-established investment managers, emerging firms and securities all around the world. We augment our core bottom-up manager selection process with top-down portfolio overlays and rigorous asset allocation analyses. We maintain a robust co-investment program to upsize particularly attractive opportunities with the added benefit of a lower fee structure. We seek to strengthen our existing capabilities while thoughtfully evolving our investment model to find new sources of attractive returns in an increasingly competitive return environment.
We evaluate and manage risk.
Our primary function is to identify attractive investment opportunities and assess the likelihood of earning sufficient compensation for assuming the associated risks. As such, we measure and manage risk, but do not seek to avoid it. UVIMCO measures and controls for risk based upon the risk tolerance and capital requirements of the University. We assume certain risks, but avoid others when we are unable to either absorb the associated potential downside or earn enough premium for bearing those risks.
Please see our annual reports for additional details.